Bayens v. Kinross Gold Corporation, 2014 ONCA 901

minicounsel

Footnotes

The full text of s. 138.3 is reproduced in Schedule “A” to these reasons.
R.S.O. 1990, c. S.5.
Although, as pleaded, the appellants’ Goodwill Impairment Claim applies to both mines, the focus of their submissions on the leave motion and this appeal was the goodwill associated with the Tasiast mine.
S.O. 1992, c. 6.
On October 11, 2013, the motion judge ordered that the Duff & Phelps LLC reports be sealed, kept confidential and not form part of the public record, with access to the reports being made available only to specified persons or entities, including the court. The motion judge also directed that the sealing order continue after the final disposition of the leave and certification proceedings. Accordingly, while this court reviewed the full version of the reports, reference in these reasons is made only to part of the contents of the reports as disclosed on the public record.
Although Kinross’ February 15, 2012 press release refers to a goodwill write down of $2.94 million, this appears to have been a typographical error. In a February 16, 2012 Q4 earnings conference call, Kinross reported a goodwill impairment charge of $2.9 billion. The latter figure is the amount referenced by the motion judge, at para. 142 of his reasons, by the appellants in their facta on appeal and on the leave motion, and by the appellants’ accounting expert (Alan T. Mak) in his reports filed on the leave motion.
Where additional facts are relevant to the issues on appeal, I will discuss those facts in the context of the issues to which they relate.
Section 5(1)(a) of the CPA provides: “The court shall certify a class proceeding…if, (a) the pleadings or the notice of application discloses a cause of action.”
It was not until January 7, 2014, after the release of the motion judge’s reasons on the leave motion, that the appellants amended their statement of claim to plead the Expansion Claim.
I note that the question whether the appellants have proposed an acceptable litigation plan is not an issue on appeal.
See for example, Markson v. MBNA Canada Bank, 2007 ONCA 334, 85 O.R. (3d) 321, at para. 40, leave to appeal to S.C.C. refused, [2007] S.C.C.A. No. 346, citing Chadha v. Bayer Inc. (2003), 63 O.R. (3d) 22, at para. 49, leave to appeal to S.C.C. refused, [2003] S.C.C.A. No. 106. See also Gilbert v. Canadian Imperial Bank of Commerce, 2004 34176 (S.C.J.).

CITATION: Bayens v. Kinross Gold Corporation, 2014 ONCA 901

DATE: 20141217

DOCKET: C57988

Hoy A.C.J.O., Cronk and Pepall JJ.A.

BETWEEN

E. Eddy Bayens, John Sinclair, Luc Fortin, Pierre Racicot and Stanley Shortt, in their capacity as Trustees of the Musicians’ Pension Fund of Canada

Appellants

and

Kinross Gold Corporation, Tye W. Burt, Paul H. Barry, Glen J. Masterman and Kenneth G. Thomas

Respondents

Kirk M. Baert, Celeste Poltak and Garth Myers, for the appellants

Mark A. Gelowitz, Allan D. Coleman and Robert Carson, for the respondents

Heard: June 11, 2014

On appeal from the order of Justice Paul M. Perell of the Superior Court of Justice, dated November 5, 2013, with reasons reported at 2013 ONSC 6864.

Cronk J.A.:

A. Introduction

1The appellants, the trustees of the Musicians’ Pension Fund of Canada, are representative plaintiffs in a putative class proceeding against the respondents, Kinross Gold Corporation (“Kinross”), a Toronto-based international mining company, and four of its current or former officers. Kinross’ shares trade on the Toronto and New York Stock Exchanges. The appellants purchased Kinross shares, in their capacity as trustees of the pension fund. In 2012, they commenced a class action against the respondents on their own behalf and on behalf of other specified persons who acquired Kinross shares during the period February 16, 2011 to January 16, 2012, claiming damages in the amount of $4 billion for alleged common law and statutory misrepresentations pertaining to two gold mines owned by Kinross: the “Tasiast” mine in Mauritania, West Africa and the “Chirano” mine in Ghana. The statutory claims are based on the statutory cause of action for misrepresentation created under s. 138.3¹ of Part XXIII.1 of the Ontario Securities Act (the “Securities Act”)².

2The appellants assert that Kinross’ public disclosure concerning the mines was misleading in two key respects. First, they allege that Kinross overstated the value of goodwill for the mines by failing to record a goodwill impairment charge relating to the Tasiast mine on a timely basis (the “Goodwill Impairment Claim”).³ In particular, the appellants say that adverse drilling results at the Tasiast mine in 2011 constituted a “triggering event” under applicable accounting standards, requiring Kinross to record a goodwill impairment charge that year. Although Kinross did record a goodwill impairment charge of $2.94 billion in early 2012, the appellants maintain that this recording occurred much too late.

3Second, the appellants submit that Kinross wrongly represented that its planned expansion project for the Tasiast mine remained on schedule when, in fact, the schedule was unrealistic (the “Expansion Claim”).

4The appellants brought a motion for an order granting them leave under s. 138.8(1) of the Securities Act to proceed with the statutory action and for an order certifying their action as a class proceeding under the Class Proceedings Act, 1992 (the “CPA”).⁴

5The motion judge dismissed the leave and certification motion. He ruled that there was no possibility, let alone a reasonable possibility, that the Goodwill Impairment Claim would succeed at trial because the expert accounting evidence relied on by the appellants to support this claim was fatally flawed. As a result, in his view, there was no factual basis for this claim.

6The motion judge declined to consider the Expansion Claim because it was not pleaded by the appellants. In addition, he refused to certify the statutory or common law misrepresentation claims under the CPA because he had denied leave to proceed with the statutory claims and, in his view, it “necessarily follow[ed] that both the statutory claim and the common law negligence claim fail[ed] to satisfy the certification criteria of the [CPA]”: at para. 11. In light of these rulings, all that remained of the appellants’ claims was their uncertified action for common law damages.

7The appellants appeal from the motion judge’s leave and certification rulings. They make three main submissions. First, the motion judge erred, in several respects, by finding that there was no reasonable possibility that the Goodwill Impairment Claim could succeed at trial. Second, the motion judge erred by refusing to consider the Expansion Claim on the basis that it was not pleaded. Finally, the motion judge also erred by denying certification of the common law negligent misrepresentation claims solely on the basis of his refusal to grant leave to proceed with the statutory claims, especially where, the appellants say, he concluded that the common law claims met all criteria for certification under the CPA.

8For the reasons that follow, I would dismiss the appeal from the motion judge’s leave and certification rulings.

B. Background in Brief

(1) Acquisition of the Gold Mines

9In September 2010, Kinross acquired Red Back Mining Inc. (“Red Back”), which owned the Tasiast and Chirano gold mines, for an aggregate purchase price of $8.72 billion. The purchase price included a substantial premium beyond the established value of the mines: e.g. $6.58 billion of the purchase price was allocated to the Tasiast mine, although its net asset value (“NAV”) at acquisition was $1.92 billion. Of the $8.72 billion purchase price, $5.54 billion was attributed to goodwill, $4.62 billion of which related to the Tasiast mine.

(2) Kinross’ Drilling Programs and Results at the Tasiast Mine

10The record before the motion judge established that there are three categories of mineral resources:

“Inferred” mineral resources – the existence of which is estimated with a low degree of confidence, based on limited drilling. Due to the restricted degree of confidence attaching to inferred mineral resources, estimates of these resources are excluded from estimates grounding mine feasibility studies;
“Indicated” mineral resources – the existence of which is estimated with a level of confidence sufficient to support mine planning and the evaluation of mine economic viability, based on reasonable assumptions of geological and grade or quality continuity of resources derived from “infill drilling”; and
“Measured” mineral resources – the existence of which is estimated with a higher level of confidence than those applicable to inferred and indicated mineral resources, based on drilling that confirms geological and grade or quality continuity of mineral deposits.

11When Kinross acquired Red Back, it publicly announced that the acquisition created a “transformational opportunity” for the company, and that the Tasiast mine had the “potential to be one of the world’s great gold deposits”. It also stated that it would engage in an extensive drilling program at the Tasiast mine, culminating in an economic feasibility study for the mine by July 2011 and the commencement of mine construction by mid-2012 and mine production by early 2014.

12At the time of these announcements, Red Back had reported approximately 9.3 million ounces of estimated proven and probable mineral reserves and measured and indicated mineral resources at Tasiast, plus an additional 1.9 million ounces of estimated inferred mineral resources.

13In the months following the September 2010 Red Back acquisition, Kinross sought to expand the mineral resource estimates at the Tasiast mine by undertaking “exploration” drilling. On the motion judge’s uncontested findings, this type of drilling involves the search for new mineral deposits in previously unexplored or underexplored areas.

14On February 16, 2011, Kinross issued a press release indicating that, as at December 31, 2010, its post-acquisition exploration drilling at the Tasiast mine had added approximately 7.1 million ounces of estimated mineral reserves and mineral resources to previous estimates.

15Commencing in 2011, Kinross shifted its drilling program at the Tasiast mine to “infill” or “expansion” drilling. The motion judge accepted that this type of drilling is conducted in areas adjacent to or below existing, known ore deposits with the view to increasing confidence in the characteristics of the known mineralization.

16Based on the results of its 2011 infill drilling, Kinross upgraded about 6.4 million ounces of estimated “inferred” mineral resources at the Tasiast mine to the “indicated” and “measured” resource categories. There was evidence before the motion judge that by the end of 2011, the amount of mineral resources available for use in the intended Tasiast mine feasibility study had almost doubled.

17From February 2011 to January 16, 2012, Kinross continued to report that its drilling program at the Tasiast mine was “meeting or exceeding expectations”, that the Tasiast feasibility study was progressing positively, and that the planned commencement of construction at the mine was on-target for mid-2012, with production to follow in early 2014.

18Kinross claims that nothing came to light in the first three fiscal quarters (Q1 to Q3) of 2011 to suggest that it should test for goodwill impairment in connection with the Tasiast mine. Nonetheless, in each fiscal quarter, it evaluated whether any indicators of goodwill impairment for the mine were present. It also conducted a formal goodwill impairment test as at December 31, 2011, in accordance with applicable International Financial Reporting Standards (“IFRS”).

(3) 2012 Announcements

19Kinross hired an investment banking firm, Duff & Phelps LLC, to undertake valuations of the Tasiast and Chirano mines at the time of acquisition and to perform goodwill impairment analyses for Kinross’ 2010 and 2011 fiscal years.

20In early January 2012, based on Duff & Phelps LLC’s preliminary valuation work, Kinross determined that it should disclose a possible future goodwill impairment charge relating to the Tasiast mine.

21On January 16, 2012, Kinross issued a press release announcing that it expected to record a goodwill impairment charge for the Tasiast mine and that the Tasiast expansion project would be delayed. In its news release, Kinross stated in part concerning goodwill:

Goodwill impairment assessment

As required by [IFRS], the Company is in the process of carrying out its annual impairment assessment and expects to release the results of this assessment with its year-end financial results. In view of the Company’s evolving understanding of Tasiast project parameters, and market conditions, including industry-wide increases in capital and operating costs, the Company expects to record a material non-cash accounting charge, primarily relating to the goodwill recorded for the Tasiast mine in connection with the 2010 Red Back acquisition. As disclosed in the 2011 third quarter financial statements, as at September 30, 2011, the book value of total assets of Tasiast was $7.1 billion, of which $4.6 billion was goodwill. The Company has not finalized the Tasiast feasibility study or mine plan, and drilling results processed to date continue to demonstrate significant exploration potential supporting a world class mine. [Emphasis added.]

22The appellants allege in their pleading that this announcement precipitated a dramatic decline in the value of Kinross shares, causing “more than $3.4 billion in lost shareholder value” (at para. 8).

23In early 2012, Duff & Phelps LLC completed their valuation of the Tasiast mine. In its 2011 valuation report, dated February 15, 2012,⁵ Duff & Phelps LLC explained that the reduced value for the mine was based on market factors, especially, the contraction of market NAV multiples.

24On February 15, 2012, Kinross announced its 2011 Q4 and year end results as at December 31, 2011. On that date, it wrote down $2.94 billion of its goodwill: $2.49 billion for the Tasiast mine and $447.5 million for the Chirano mine. In its February 15th press release, Kinross indicated:

Reported net earnings included a non-cash goodwill impairment charge of $2,937.6 million, as outlined on page 12 of this news release. The impairment charge was a result of changes in market conditions, including industry-wide increases in capital and operating costs, a decline in industry-wide valuations as at year-end and the Company’s growing understanding of the Tasiast project parameters including its analysis of a draft mine plan. The Tasiast project represents $2,490.1 million and Chirano $447.5 million of the non-cash goodwill impairment charge recorded.⁶ [Emphasis added.]

25Also on February 15th, Kinross disclosed that it expected to complete its feasibility study for the Tasiast mine in the first half of 2013, and that mine construction would commence in mid-2013 and mine production in 2015. Each of these dates was at least one year later than the original estimated date for completion of the activity in question.

26Kinross subsequently recorded two additional write downs of the value of the Tasiast mine, eventually leading to a 100% write down of the goodwill. By the time of the leave and certification motion, the Tasiast mine was valued at about $1.42 billion, reflecting a 78% decline in value from the $6.58 billion allocated by Kinross to the Tasiast mine on the 2010 Red Back acquisition.

(4) Expert Accounting and Valuation Evidence

27In their factum on the leave and certification motion, the appellants described their Goodwill Impairment Claim in these terms:

ii. The Strength, Merits and Evidence of the Plaintiffs’

Case

Overview. When Kinross acquired Red Back and a 100% interest in the Tasiast mine in 2010, it paid a premium of $5.5 billion over the value of Red Back’s identifiable net assets. The premium reflected Kinross’ expectation of significant yet-to-be confirmed gold reserves being found on the Tasiast property. … By March 31, 2011, the infill drilling program had been 95% completed, further confirming materially lower than expected ore reserves and adverse data.

As the failure to achieve a predetermined expectation of asset performance constitutes a “triggering event”, the Tasiast goodwill write down ought to have been taken by Kinross in its March 31, June 30 or September 30, 2011 quarterly financial statements. [Emphasis added.]

28In support of their Goodwill Impairment Claim, the appellants relied on an expert accounting opinion from Alan T. Mak, a chartered accountant, that Kinross should have reported a goodwill impairment charge for the Tasiast mine prior to the end of 2011. Mr. Mak’s initial report, dated October 1, 2012, contains this summary of his opinion:

Kinross acquired the Tasiast Mine with an expectation that it contained significant, yet-to-be discovered gold deposits. A purchase price premium of over $5.5 billion was paid, over and above Red Back’s identifiable net assets.

IFRS requires asset impairment evaluations whenever impairment indicators exist. If an asset, such as goodwill, is impaired and the carrying value exceeds the recoverable value of the asset, a write-down would be required. The purpose is to prevent overstated asset values (and profits), which could mislead financial statement readers.

Upon completing a scoping study in December 2011, Kinross conducted an infill drilling program to confirm the expected ore. Kinross’s first quarter 2011 report claimed to have 95% completion of its infill drilling program by March 31, 2011. The reserve data that was disclosed by Kinross in its first and third quarters of 2011 indicates that the confirmed gold deposits at Tasiast remained substantially consistent throughout the relevant period. The expected additional reserves were not confirmed by Kinross’ infill drilling.

Evidence that an asset will not perform as expected, such as adverse drilling results, constitute an “impairment indicator”. From an accounting perspective, a serious concern is that Kinross ought to have performed an impairment evaluation at each of the interim reporting periods in 2011, and that an impairment charge for the goodwill associated with the Tasiast Mine ought to have been recorded earlier than the December 31, 2011 financial statement. [Emphasis added.]

29After receiving Duff & Phelps LLC’s 2011 valuation report and the respondents’ expert evidence on the leave and certification motion, Mr. Mak delivered a further report in which he offered the opinion that Kinross had reduced the NAV multiple on the Tasiast mine because its drilling data in early 2011 failed to confirm its expectations of the existence of additional mineralization at the mine. In his second report, dated May 6, 2013, Mr. Mak said:

We are not persuaded by their remarks to alter our opinions as stated in our October Report. Kinross claims that its December 31, 2011 write-down of the [Red Back] goodwill asset (announced on or about January 16, 2012) was motivated by industry-wide Net Asset Value Multiple (“NAVM”) “contraction”. Even if this explanation were to be accepted, it does not address our concern that a much earlier write-down due to inferior anticipated mineralization was necessary and appropriate. As set out in our October Report, the absence of data to confirm pre-determined expectations of asset performance (such as the existence of additional or potential gold) constitutes a “triggering event” in accordance with acceptance Canadian accounting standards.

Some of the Defendants’ witnesses also claim that the mineralization at Tasiast was consistent with management’s expectations when Red Back was acquired. To the contrary, the available data in early 2011 supports our view that Kinross’ management’s high expectations of Red Back’s gold potential at the Tasiast and Chirano mines were not supported by contemporaneous data. “Triggering events”, requiring accounting recognition of impairment, include the failure to confirm the existence of expected additional ore. [Emphasis added.]

30In contrast, Edward Lee of Duff & Phelps LLC provided opinion evidence on behalf of Kinross that, contrary to the appellants’ allegations, the reduction or “contraction” of the NAV multiple for the Tasiast mine was not related to mine-specific drilling results prior to Kinross’ 2011 year-end or diminished management expectations concerning ore or exploration potential. Duff & Phelps LLC maintained that the reduction was attributable to market forces, that is, to industry-wide, systemic contractions in market NAV multiples.⁷

C. Issues

31As argued, the grounds of appeal advanced in respect of the motion judge’s leave ruling may be framed as follows:

Did the motion judge err in finding that there was no possibility, let alone a reasonable possibility, that the Goodwill Impairment Claim would succeed at trial:

a) by misapprehending the nature of the leave test under s. 138.8(1) of the Securities Act;

b) by exceeding his proper role on the leave motion;

c) by “assuming” that the entirety of the relevant information regarding Kinross’ 2011 drilling program was before the court on the leave motion; and

d) by mischaracterizing the nature of the appellants’ Goodwill Impairment Claim and, consequently, by failing to properly consider Kinross’ explanation for its goodwill write down?

Did the motion judge err by failing to consider the Expansion Claim?

32There is one principal issue regarding the motion judge’s certification ruling: did the motion judge err by denying certification of the common law misrepresentation claims on the basis that the denial of leave to proceed with the statutory claims was dispositive of the certification issue concerning the common law claims?

D. Analysis

(1) Leave Ruling

33Under s. 138.8(1) of the Securities Act, leave of the court is required to proceed with a statutory misrepresentation claim under s. 138.3. Section 138.8(1) reads:

138.8(1) No action may be commenced under s. 138.3 without leave of the court granted upon motion with notice to each defendant. The court shall grant leave only where it is satisfied that,

(a) the action is being brought in good faith; and

(b) there is a reasonable possibility that the action will be resolved at trial in favour of the plaintiff.

34The narrow but critical issue in this case is whether the appellants met the second branch of the leave test, that is, whether they demonstrated “a reasonable possibility” that their action would be resolved at trial in their favour (the “reasonable possibility requirement”). The respondents do not dispute that the appellants brought the action in good faith, satisfying the first branch of the test.

(a) Goodwill Impairment Claim

(i) Motion Judge’s Appreciation of the Leave Test

35The appellants’ first ground concerning the leave ruling is that, in light of this court’s recent decision in Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90, 118 O.R. (3d) 641, leave to appeal to S.C.C. granted, [2014] S.C.C.A. No. 137, the motion judge misapprehended the reasonable possibility requirement of the leave test.

36Although the appellants attack the motion judge’s reasons on multiple fronts, they take particular aim at two parts of his reasons. The first part, set out at paras. 34 and 38 of the reasons, reads as follows:

[T]he leave test is not a mere “road bump” threshold and is not so low as to be redundant to the notoriously low bar used to test whether a plaintiff has disclosed a cause of action (the not plain and obvious test) under Rule 21 of the Rules of Civil Procedure or under s. 5(1)(a) of the [CPA]. And, remembering that certification is not to be a test of the merits, in my opinion, the merits-based leave test under the Ontario Securities Act sets a higher evidentiary standard than the “some basis in fact” standard used to implement the test for certification under the [CPA].

However, for my part, I do not think that the debate about the measure of the height for the bar for the test for leave is over. I do not see how the Supreme Court’s judgment in R. v. Imperial Tobacco Canada, which is about a test where the court is obliged to accept the material facts set out in the statement of claim as true, is helpful in setting the bar for an evidentiary merits-based leave test, where the consensus is that the test is a genuine screening mechanism that requires the court to assess and weigh the evidence and to determine whether the plaintiff’s chance of success is a reasonable possibility. [Citations omitted; Emphasis added.]

37The appellants maintain that these statements conflict with this court’s holding in Green, at para. 88, that the test for meeting the reasonable possibility requirement is “the same test that is used for determining whether the claim has a reasonable prospect of success for the purpose of certification [under the CPA]” (emphasis added).

38The second impugned part of the motion judge’s reasons is found at paras. 43 and 44. In these paragraphs, the motion judge set out a negative formulation of the reasonable possibility requirement, describing it in part, at para. 44, in this fashion:

There is not a reasonable possibility that an action will be resolved at trial in favour of the plaintiff, if:

(b) the plaintiff fails to provide any admissible or believable evidence of the material facts of his or her claim;

(f) the defendant disproves the truth of the facts of the plaintiff’s claim.

39The appellants contend that by expressing the reasonable possibility requirement in a negative fashion, the motion judge misdirected himself by asking the wrong question. It is inappropriate at the leave stage, the appellants say, to try to determine why a claim should not proceed. Rather, the proper inquiry is whether there is a reasonable possibility that the claim will succeed at trial. In addition, some of the negative propositions articulated by the motion judge, for example subparagraphs (b) and (f) above, are clearly inapplicable at the leave stage.

40To address these complaints, I begin with Green. Before this court’s decision in Green, there were conflicting Superior Court rulings regarding the nature of the s. 138.8(1) leave test under the Securities Act. Predominate in the debate was the question of how “high” or “low” the bar should be set to meet the reasonable possibility requirement under s. 138.8(1)(b).

41Justice Feldman wrote the reasons of the unanimous five-person panel in Green. She reviewed the history and purpose of ss. 138.3 and 138.8(1) of the Securities Act, as well as several leading authorities in which the meaning of the term “reasonable possibility of success” or analogous phrases was considered by the courts, including in the context of s. 5(1)(a) of the CPA.⁸

42After undertaking this review, Feldman J.A. made the following observations regarding the leave test, including the reasonable possibility requirement of the test, at paras. 40 and 85-88:

[T]wo further protections were later added to the proposed new action [under s. 138.3 of the Securities Act] to prevent strike suits in Canada; one was court-approved settlements. The other was a screening mechanism that required a plaintiff to seek leave of the court to commence an action, where the court would consider the merits of the proposed action by examining the evidence and determining whether the action was being brought in good faith and had a reasonable possibility of success. That is the leave requirement in s. 138.8 of the Securities Act.

Fortunately, in the class action context, the reasonable possibility concept is very familiar because it is used for determining whether the pleading discloses a cause of action as required by the first part of the test for certification in s. 5(1)(a) of the CPA. As this court recently said in Arora v. Whirlpool Canada LP, 2013 ONCA 657, at para. 14:

Certification is to be denied on the basis that the requirement of s. 5(1)(a) is not met only if, assuming the facts pleaded are true, it is plain and obvious that the pleading discloses no reasonable cause of action, meaning that the plaintiff has no reasonable prospect of success. [Citations omitted.]

The phrase “reasonable prospect of success” was used by McLachlin C.J. in Knight v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45 (also called R. v. Imperial Tobacco Canada Ltd.) where, in reference to a motion to strike a claim, the Chief Justice stated the test to be whether “the claim has any reasonable prospect of success”. She described its effect as “weeding out the hopeless claims and ensuring that those that have some chance of success go to trial” (para. 19). Again, at para. 20, she refers to claims that have “a reasonable prospect of success” and “a reasonable chance of success”.

It is apparent that the terms “prospect” and “chance” are being used by the Chief Justice as synonyms, and I would include the term “possibility” as another one.

The purpose of the leave provision under Part XXIII.1 of the Securities Act is to discourage and eliminate bad faith strike suits that do not have a reasonable possibility of being successful. The statute asks the leave judge to first determine good faith, then whether there is a “reasonable possibility” that the action will be resolved at trial in favour of the plaintiff, i.e. that the plaintiff’s case will be successful -- a reasonable possibility of success. In order to make that determination, the motion judge applies the same test that is used for determining whether the claim has a reasonable prospect of success for the purpose of certification. As the Chief Justice has described it, the purpose is to weed out hopeless claims and only allow those to go forward that have “some chance of success”. [Emphasis added.]

43However, Feldman J.A. also cautioned, at para. 89:

Of course, the evidentiary record for the leave and certification motions is quite different. For the leave motion, each side may file affidavit evidence upon which there can be cross-examination. But…the motion is brought before discovery and production of documents, with the result that the evidence may or may not be the same at trial. In contrast, for the certification motion under s. 5(1)(a), there is no evidentiary record but the facts as pleaded in the statement of claim are taken to be true. In both there is an evidentiary or deemed evidentiary record to which the test is applied. [Emphasis added.]

44Justice Feldman thus focused on the purpose of the leave test and the actual words used by the legislature in s. 138.8(1)(b). She stressed that the language employed in that section is effectively the same as the language of the test applicable to the cause of action criterion for certification under s. 5(1)(a) of the CPA and under the test on a pleadings motion to strike a claim. Under all three tests, the operative concept is “a reasonable prospect” or “a reasonable chance” or “a reasonable possibility” of success. The meaning to be accorded to all three phrases, therefore, must be the same.

45It is in this sense that Green holds, at para. 88, that the test for the reasonable possibility requirement under s. 138.8(1)(b) is the “same test” that is used for determining whether the statutory claim has a reasonable prospect of success for the purpose of certification. In other words, the standard to be applied to the record before the court is identical. Crucially, however, Feldman J.A. also emphasized that this standard is applied in entirely different contexts. As she put it, at para. 89, “the evidentiary record for the leave and certification motions is quite different.”

46On a leave motion, the standard is brought to bear on a paper record, consisting of affidavit evidence and the transcripts of any cross-examinations on the affidavits filed. The court is not required to make any assumptions about the quality of the evidence filed by the plaintiffs. In contrast, for certification purposes, the standard under s. 5(1)(a) of the CPA is applied to the pleadings. There is no evidentiary record filed and the facts pleaded are assumed to be true, leading to what Feldman J.A. termed in Green, at para. 89, “a deemed evidentiary record”. Thus, the evidentiary bases differ, although the test or standard applied to the applicable evidentiary base is the same.

47That this is the central holding on this issue in Green, properly read, is made clear by Feldman J.A.’s comments at para. 91:

In the securities class action context, there is also a significant procedural advantage to having the same test apply to the leave motion as to the certification motion. If the leave motion is heard before the certification motion and leave is denied, the claim is at an end. But if leave is granted, it will be unnecessary to reconsider the issue on the certification motion. Because the test is the same, and the evidentiary basis is the highest it can be for the plaintiff on the certification motion, once leave is granted on the record filed, the claim will also meet the cause of action criterion under s. 5(1)(a) of the CPA. [Emphasis added.]

48This statement recognizes that, unlike on a leave motion, the plaintiffs on a certification motion enjoy the benefit of their case being assessed in the most favourable possible factual light: under s. 5(1)(a) of the CPA, the facts pleaded are assumed to be true unless they are patently ridiculous or incapable of proof. If leave is granted under s. 138.8(1) of the Securities Act, where no such assumption applies, the claim in respect of which leave is granted will inevitably meet the cause of action criterion for certification. Simply put, regardless of the outcome on the leave motion, the plaintiffs’ case is at its strongest on the certification motion.

49Thus, in sum, the reasonable possibility requirement of the leave test is a relatively low threshold, merits-based test. The determination whether a plaintiff’s statutory action will have a reasonable possibility of success at trial requires some critical evaluation of the merits of the action, based on all the evidence proffered by the parties on the leave motion. Further, the standard applied to the evidentiary record is the same standard applicable to a certification determination under s. 5(1)(a) of the CPA or on a motion to strike. However, the standard is applied to different records, in different contexts, for entirely different purposes.

50In my view, it does not assist to fashion a negative construct of the reasonable possibility requirement under s. 138.8(1)(b). The important point under Green is that the relatively low threshold, merits-based leave test is to be applied to the entirety of the record before the court, mindful of the inherent limitations of a preliminary motion determined in advance of discovery and documentary production. Any further qualification of the leave test, including the reasonable possibility requirement, is unnecessary: Green at para. 90.

51Applying these principles to the appellants’ first ground of appeal, I am not persuaded that, in the end, the motion judge misapprehended the leave test in any material way. Read as a whole, his reasons confirm that he appreciated the essential nature of the leave test under s. 138.8(1) of the Securities Act, including the reasonable possibility requirement, as outlined by this court in Green. I say this for the following reasons.

52First, the motion judge did not have the benefit of this court’s decision in Green. However, in his lengthy reasons he relied heavily on the decision of Strathy J. (as he then was) in Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, which this court affirmed in part, as well as related cases in which the leave test was implicated. In so doing, he identified the following key features of the leave test:

the leave test is not purely a procedural or jurisdictional test. It is “a low-threshold evidentiary merits-based test using affidavit evidence and cross-examinations” that requires some weighing of the evidence (paras. 27, 49 and 51);
the test is a genuine screening mechanism and “an evidentiary merits-based leave test” that requires the court to assess and weigh the evidence and to determine whether the plaintiff’s chance of success is a reasonable possibility (paras. 27 and 38);
in setting the bar for this “low evidentiary threshold”, the court must take into account that the leave motion involves merely a paper record and “it is neither possible nor desirable to decide reasonably arguable issues of fact or of mixed fact and law” (para. 41); and
“in all events, the court must assess the evidentiary record … and measure that evidence against a substantive but low threshold test of probity” (para. 45).

53These observations capture the core features of the leave test, including the reasonable possibility requirement under s. 138.8(1)(b), and they are consistent with the Green court’s interpretation of the test. Indeed, they foreshadowed many of Feldman J.A.’s comments in Green.

54Second, both before the motion judge and initially before this court, the appellants argued that the leave test does not envisage or permit any weighing of the evidence adduced on the leave motion. They maintained that in weighing the evidence, particularly Mr. Mak’s opinion evidence, the motion judge erred. However, in oral argument, the appellants acknowledged that the leave test involves a merits-based review of the evidentiary record on the leave motion and that this review necessarily requires some weighing of the evidence, the drawing of appropriate inferences, and the finding of facts established by the record.

55This was a proper concession. It conforms with this court’s holdings in Green, set out above. The motion judge was alert to this issue when he observed, correctly, that the exercise of granting or refusing leave requires “some weighing of the evidence” of both parties “within the constraints of a low bar evidentiary merits-based test” (at paras. 49-51 and 55).

56That this is so, is also confirmed by the statute itself. Under s. 138.8(2) of the Securities Act, upon a leave application under s. 138.8(1), the plaintiff and each defendant may serve and file affidavit evidence setting forth the material facts upon which each intends to rely. Section 138.8(3) explicitly provides for the right to cross-examine the deponents of the affidavits filed. If the legislature had intended that the leave test not involve some weighing of the evidence adduced on the leave motion, there would be no need for the filing of responding affidavits by each defendant, nor any purpose in providing for a right of cross-examination on those affidavits. In those circumstances, as the respondents argue, the leave requirement would be hollow indeed.

57I would reject this ground of appeal.

(ii) Other Grounds Concerning Leave Ruling

58The appellants’ other grounds of appeal from the leave ruling concern the motion judge’s treatment of the evidence. I will address these grounds in turn.

Did the Motion Judge Exceed His Proper Role?

59The appellants’ argument that the motion judge exceeded his proper role on the leave motion has two components. First, as originally cast, it is predicated on the proposition that the motion judge was precluded from engaging in any weighing of the evidence on the leave motion. I have already rejected this proposition. It collides with the merits-based focus of the leave inquiry as described in Green and, additionally, in my view, with the statutory leave scheme itself.

60The second component concerns the motion judge’s assessment of Mr. Mak’s opinion evidence. As set out in their factum, the appellants maintain that the motion judge “improperly undertook a trial-like weighing of technical evidence and drew inferences that would have only been appropriate at trial or a post-discovery summary judgment motion”. During oral argument, the appellants elaborated that the motion judge’s reasons for rejecting Mr. Mak’s evidence involved conclusions on technical evidence that were beyond the scope of the motion judge’s expertise.

61I disagree. In my opinion, the motion judge applied a proper level of scrutiny to Mr. Mak’s evidence and his conclusions regarding the Mak opinion were squarely within his domain on the leave motion.

62The appellants indicated in their factum on the leave motion that the Goodwill Impairment Claim was based on the assertion that, by the spring of 2011, Kinross drilling results at the Tasiast mine had confirmed “materially lower than expected ore reserves and adverse data”, which evidenced a failure “to achieve a predetermined expectation of asset performance” in relation to the mine. This, the appellants said, constituted a “triggering event” under applicable accounting standards, necessitating the recording by Kinross of a goodwill impairment charge in its Q1 to Q3 2011 financial statements.

63Mr. Mak’s evidence was the only expert accounting evidence led by the appellants on the leave motion in support of their Goodwill Impairment Claim. Mr. Mak offered the opinion that evidence that an asset will not perform as expected – such as adverse drilling results – constitutes an “impairment indicator” or a “triggering event” under accepted Canadian accounting standards. In this case, as Kinross allegedly failed to confirm the existence of expected additional ore at the Tasiast mine in 2011, a goodwill impairment charge before 2012 was required.

64The motion judge concluded that this opinion suffered from three fatal flaws. He held, in effect, that in formulating his opinion, Mr. Mak: 1) relied on irrelevant data; 2) ignored relevant data that did not support his opinion; and 3) mischaracterized or misunderstood the import of existing data regarding the Tasiast mine.

65It is unnecessary to repeat the motion judge’s detailed analysis of each of these flaws, as described in his lengthy reasons. In brief, he concluded that:

Mr. Mak relied on the results of Kinross’ infill or expansion drilling at the Tasiast mine, rather than its exploration drilling, to ground his assertion that expected additional mineralization at the mine was not confirmed in 2011. However, infill drilling, as distinct from exploration drilling, is not designed to identify or confirm previously unknown exploration potential. Rather, it is intended to garner additional data about known, existing mineral resources;
Mr. Mak failed to take account of the results of Kinross’ 2010 exploration drilling at the Tasiast mine (September to December 2010). The evidence indicated that Kinross’ 2010 post-acquisition exploration drilling at the Tasiast mine yielded several million additional ounces of estimated mineral reserves and resources, beyond those previously reported by Red Back; and
Mr. Mak claimed that “[t]he expected additional reserves [at the Tasiast mine] were not confirmed by Kinross’ [2011] infill drilling” and that this infill drilling “fail[ed] to confirm the existence of expected additional ore” at the mine. Mr. Mak’s misconception of the purpose of infill drilling aside, in the motion judge’s view, these statements did not accurately reflect the results of the infill drilling. Contrary to the suggestion that these results were disappointing or adverse, the evidence established that following the infill drilling, the Tasiast mine mineral resource estimates were upgraded from merely inferred resources, to indicated and measured resources.

66Based on these deficiencies in the Mak opinion, the motion judge held, at para. 193, “[t]here is, therefore, no factual basis for [the appellants’ Goodwill Impairment Claim] and no reasonable possibility that [this] claim could succeed at trial.”

67I see no reversible error in the motion judge’s approach to or analysis of the Mak opinion. It is true, as the appellants stress, that the motion judge made no adverse credibility finding regarding Mr. Mak. To the contrary, he accepted Mr. Mak as a believable and honest witness. However, that was not the end of the matter. The motion judge also evaluated the reliability of the Mak opinion, as he was entitled to do, and found that it was infected by the three critical flaws described above.

68The motion judge did not overstep his proper role on the leave motion by examining the factual underpinnings of Mr. Mak’s opinion. Indeed, this type of scrutiny of expert evidence is both required to determine its reliability and common place where an asserted claim depends, as here, on expert evidence. The motion judge’s conclusions were open to him on the evidentiary record. They derived from a logical analysis of the factual contents of Mr. Mak’s reports, in the light of all the expert accounting and valuation evidence led on the leave motion.

69In my view, this ground of appeal fails.

Sufficiency of Evidence of Kinross’ 2011 Drilling Program

70The appellants submit that the motion judge erred by “assuming” that all relevant information about Kinross’ 2011 drilling program was before the court on the leave motion, notwithstanding that discoveries and documentary production had not yet occurred. Again, I disagree.

71The motion judge expressly considered whether the normal progress of the action through the discovery and documentary production stages of civil litigation might furnish additional facts or other evidence that would strengthen the prospects of the appellants’ ultimate success at trial. He held, at para. 176, that “the factual foundation for the theory of [the appellants’] case is now known and does not await further disclosures”. He continued:

Whether there was a triggering event based on the known empirical results of the drilling programs at the Tasiast mine are now known facts that will not be changed by the discovery process or by a trial. …[The appellants’] case is built on what it says should have been Kinross’ objective response to the results of its drilling programs.

This conclusion focused on the facts asserted in the Mak opinion.

72As detailed in their factum, the appellants attack this conclusion on two grounds: 1) Mr. Mak’s opinion was preliminary in nature since it was based solely on public information; and 2) the motion judge did not explain how, at the leave stage, he “knew, definitively, that there was no negative non-public information about the 2011 drilling program or the Tasiast mine in 2011” (emphasis in original).

73Neither of these complaints, in my opinion, undermines the motion judge’s conclusion that the evidence on the leave motion was sufficient, even without the benefit of discoveries and production, to properly assess whether there was a reasonable possibility of the success of the appellants’ statutory action at trial.

74The motion judge’s task on the leave motion was to determine whether there was a reasonable possibility that the appellants’ statutory action would be resolved at trial in their favour. His reasons confirm his understanding that the reasonable possibility requirement is to be addressed in the context of a paper evidentiary record, compiled without the benefit of discoveries or documentary production. Within these parameters and for the purpose of the leave motion, the motion judge was required to base his reasonableness inquiry on the evidentiary record as filed, without speculating about possible future, unknown evidence.

75The motion judge’s ruling on the reasonable possibility requirement was based on the case advanced by the appellants in support of their Goodwill Impairment Claim: that the results of Kinross’ 2011 infill drilling program constituted a triggering event mandating an earlier goodwill write down. For the reasons set out above, the motion judge found that the expert accounting evidence relied on by the appellants to establish the foundation for this claim was inherently flawed. The infill drilling expressly relied on by the appellants’ expert (Mr. Mak) was not designed to identify new mineralization or to confirm the exploration potential of the Tasiast mine. In these circumstances, further evidence about Kinross’ infill drilling program, if any, could not enhance the case for establishing the Goodwill Impairment Claim.

Nature of the Goodwill Impairment Claim

76The appellants next argue that the motion judge erred by mischaracterizing the nature of the Goodwill Impairment Claim and, consequently, by holding that it was unnecessary for the purpose of the leave motion to assess Kinross’ explanation for its 2012 goodwill write down. This argument may be dealt with summarily.

77The motion judge stated, at paras. 169 and 181 of his reasons:

Stripped down to its essence, it is [the appellants’] argument that Kinross ought to have written down the goodwill for the Tasiast mine within six months or eleven months, at the latest, after its purchase of the Tasiast mine because the failure to achieve its high expectations was a triggering event for a write down.

For the purposes of this leave motion, [the appellants] are under no obligation to demonstrate that Kinross’s non-culpable explanation for the write down was untrue or incorrect, and it is not necessary for me to make any findings about the merits of Kinross’s explanation. What is, however, necessary is that I decide whether [the appellants’] allegations of misrepresentations have a reasonable possibility of success at trial.

(2) Certification Ruling

89Section 5(1) of the CPA provides:

The Court shall certify a class proceeding on a motion under section 2, 3 or 4 if,

(a) the pleadings or the notice of application discloses a cause of action;

(b) there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant;

(d) a class proceeding would be the preferable procedure for the resolution of the common issues; and

(e) there is a representative plaintiff or defendant who,

(i) would fairly and adequately represent the interests of the class,

(ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and

(iii) does not have, on the common issues for the class, an interest in conflict with the interests of other class members.

90The parties accept that if leave to proceed with the statutory misrepresentation claims was properly refused under s. 138.8(1) of the Securities Act, the statutory claims cannot be said to meet the criteria for certification under the CPA. I agree. See Green at para. 91.

91Since I would uphold the motion judge’s leave ruling, the issue whether the statutory claims should be certified is at an end. The remaining question is whether the motion judge erred by declining to certify the common law negligent misrepresentation claims under the CPA.

92The appellants argue that the motion judge erred by refusing to certify the common law claims solely on the basis of his denial of leave to proceed with the statutory claims. They submit that the outcome of a leave motion under the s. 138.8(1) merits-based leave test is irrelevant to the question whether an associated common law action should be certified. The appellants maintain that, but for his improper reliance on the refusal of leave for the statutory claims, the motion judge concluded that the common law claims met all five criteria for certification under s. 5(1) of the CPA. Accordingly, those common issues found by the motion judge to apply to the common law claims should have been certified as a class proceeding.

(a) Motion Judge’s Certification Analysis

93The motion judge began his certification analysis with a description of the principles that, in his view, apply for the purpose of a certification motion when a statutory misrepresentation claim is combined with a common law negligent misrepresentation claim. His starting point is set out at para. 208 of his reasons:

[I]n my opinion, the normal certification criterion [sic] for a class action must be adapted or restructured to the circumstance that the plaintiff is advancing a class action claim using Part XXIII.1 of the Ontario Securities Act.

94The motion judge then held, at paras. 209-10, that this “adaption” or “restructuring” of the normal certification criteria has two aspects. First, if leave is granted under s. 138.8(1) of the Securities Act, “it follows that the court should certify a class action for both the statutory and the common law negligent misrepresentation claim[s]”. This finding is not contested before this court.

95The motion judge next considered the implications for the certification of the common law claims of the denial of leave for the statutory claims. He held, at para. 211, that if leave is not granted for the statutory claims, “the action will not be certified for both the statutory claim and also the common law claim which, however, may proceed as an individual claim by the plaintiff”. He reasoned, at paras. 212 and 218-220:

If leave is not granted under the Ontario Securities Act, the statutory claim obviously cannot be certified, and the common law claim will fail to satisfy three of the five certification criteria (class definition, common issues, and preferable procedure) largely for the reason that there will be no basis in fact for these certification criterion [sic] and because the common law claim standing alone will not satisfy the preferable procedure criterion.

In making these adaptions to the approach to certification of an action in which there is a statutory claim under Part XXIII.1 of the Ontario Securities Act, it must be kept in mind that the evidentiary footprint, save for the issue of reliance (which I will discuss later in these reasons for decision) for the statutory action and the common law action will essentially be the same. If the plaintiff is granted leave for the statutory claim, it would and should naturally follow that there is some basis in fact for each of the certification criterion for the common law claim.

Conversely, it would and should naturally follow that if leave is denied that there would be no basis in fact for the certification criterion [sic].

I will adopt this restructuring in discussing the certification criterion [sic] for [the appellants’] proposed class action and thus it follows that because I have refused leave for the statutory claim, it follows that [the appellants’] motion for certification should be dismissed. [Emphasis added.]

96Thus, on the motion judge’s approach, when statutory and common law misrepresentation claims are combined, the “evidentiary footprint” for the two types of claims “will essentially be the same”, except for the issue of reliance. On this basis, the motion judge concluded that if leave to proceed with the statutory claims is denied, the refusal of certification for the common law claims is effectively axiomatic.

97In my opinion, this approach to certification of the common law claims reflects an error in principle. It does not automatically follow from the denial of leave for the statutory claims that there will be no basis in fact for all of the class definition, common issues and preferable procedure certification criteria.

98The focus on a certification motion is on the form of the action and whether the asserted claims are suitable to proceed as a class proceeding: AIC Limited v. Fischer, 2013 SCC 69, [2013] 3 S.C.R. 949, at paras. 39-42; Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, [2013] 3 S.C.R. 477, at paras. 99 and 102; Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, at para. 16; Cloud v. Canada (Attorney General) (2004), 73 O.R. (3d) 401, at para. 50, leave to appeal to S.C.C. refused, [2005] S.C.C.A. No. 50. All that is required to succeed on a certification motion is that the plaintiff show some basis in fact for each of the CPA certification requirements, other than the requirement under s. 5(1)(a) that the pleadings disclose a cause of action: Fischer at paras. 1, 30, 39-42; Pro-Sys Consultants at paras. 99-100; Hollick at para. 25.

99The fact that the court, on a leave motion, has determined that the statutory claims have no reasonable possibility of success and that the evidence supporting the statutory and common law actions would essentially be the same does not mean that there is not some basis in fact: 1) that “there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant” (the class definition criterion at s. 5.1(b)); or 2) that the “claims or defences of the class members raise common issues” (the common issues criterion at s. 5.1(c)). The court’s determination of the merits of the statutory claims has no place in the analysis of these certification criteria. However, as I discuss later in these reasons, in cases like this one, the denial of leave for the statutory claims is a relevant factor in the preferability analysis.

100In this case, recognizing that his decision may be appealed, the motion judge commented on each of the certification criteria in relation to the common law claims. Apart from the preferability criterion under s. 5(1)(d) of the CPA, which I will discuss shortly, he held as follows:

cause of action criterion – assuming that the appellants’ pleading was amended to properly plead the reliance and causation elements of the tort of negligent misrepresentation, the common law claims would satisfy the cause of action criterion for certification under s. 5(1)(a) (at paras. 225, 228 and 230);
class definition criterion – if leave had been granted for the statutory claims, the appellants’ proposed class definition would meet the identifiable class criterion under s. 5(1)(b) (at paras. 233 and 236);
commonality criterion – again, if leave had been granted, the common law claims would have met the s. 5(1)(c) common issues criterion, with two exceptions relating to inferred reliance by the class members on Kinross’ alleged misrepresentations and the determination of their consequential damages on an aggregate basis (at paras. 239-242); and
representative plaintiff criterion – as Kinross essentially conceded that the appellants would be appropriate representative plaintiffs for the common law action, the s. 5(1)(e) representative plaintiff criterion would also have been satisfied if leave had been granted (at paras. 249-50).

101Thus, with respect to the s. 5(1)(b), (c) and (e) certification criteria – the class definition, common issues and representative plaintiff requirements – the motion judge’s certification findings were contingent on leave having been granted to proceed with the statutory claims. In other words, his analysis of these criteria was anchored on the premise that since the “evidentiary footprint” for the statutory and common law claims “will essentially be the same”, there was no basis in fact for these certification criteria. Since, as I discuss above, this premise is flawed, the motion judge’s evaluation of the s. 5(1)(b), (c) and (e) certification criteria was infected by error.

102The motion judge’s evaluation of the preferability criterion under s. 5(1)(d) of the CPA suffers from the same defect. Recall that, at para. 212 of his reasons, the motion judge stated that if leave is denied under s. 138.8(1) of the Securities Act, a companion common law claim will fail to satisfy three of the five certification criteria under s. 5(1) of the CPA – the class definition, common issues, and preferable procedure criteria – “largely for the reason that there will be no basis in fact for these certification [criteria] and because the common law claim standing alone will not satisfy the preferable procedure criterion”.

103Later in his reasons, at paras. 246-47, when specifically addressing the preferability criterion in relation to the common law claims, the motion judge stated:

As I explained above, in my view, if leave is not granted for the statutory claim then there is no basis in fact for the common law negligence claim which has the same evidentiary footprint. In other words, in circumstances where most of the constituent element[s] of the common law negligence claim are scrutinized by a genuine merits test and are found wanting, it is not necessary to determine whether a class action is the preferable procedure because there will be no basis in fact for the common issues.

I, therefore, conclude that, in the case at bar, the preferable procedure criterion is not satisfied. [Emphasis added.]

104The difficulty with this reasoning is that the motion judge approached his certification analysis from the perspective that if the evidentiary base for the statutory claims failed to establish a basis in fact for those claims, there could be no basis in fact for the certification criteria. I have already concluded that this approach is in error.

105The motion judge’s preferability analysis also suffers from an additional flaw. In Fischer, the Supreme Court reiterated that the preferabiltiy inquiry is to be conducted through the lens of the three principal goals of class actions, namely, judicial economy, behaviour modification and access to justice. Fischer holds that within the proper scope of the certification process, both substantive and procedural aspects of access to justice must be assessed in determining whether a class action is the preferable procedure. By reason of Fischer, that assessment is conducted under the rubric of a series of specific questions identified by the Supreme Court.

106Unfortunately, the motion judge did not have the benefit of the Supreme Court’s decision in Fischer. As a result, his preferability analysis does not conform with the analytical approach to the preferability inquiry now mandated by Fischer.

107In light of the motion judge’s error in his approach to the certification inquiry for the common law claims, coupled with the failure of his certification analysis to comport with Fischer, the deference normally owed to a motion judge’s certification analysis is not engaged. It therefore falls to this court to undertake the necessary evaluation whether the common law claims are appropriate for certification under the CPA.

(b) Certification Revisited

(i) Cause of Action, Class Definition, Commonality,

and Representative Plaintiff Criteria

108Before this court, the respondents do not dispute that the proposed class action for negligent misrepresentation meets the certification requirements of the CPA, except for the contested issue whether a class action is the preferable procedure. Accordingly, only brief comment regarding the undisputed certification criteria is necessary.

109Turning first to the cause of action criterion at s. 5(1)(a) of the CPA, the motion judge noted, at para. 159, that the appellants failed to plead two required elements of the tort of negligent misrepresentation – reliance and consequential damages. Having scrutinized the appellants’ pleading, the motion judge observed, at para. 160, that the closest the appellants came to pleading these constituent elements of the tort is at para. 99 of their Amended Statement of Claim. That paragraph reads:

The plaintiffs and Class Members relied on these misrepresentations to their detriment by the act of purchasing or acquiring Kinross shares. They also relied on the defendants’ obligation to make timely disclosure of all material facts, to comply with securities law and to prepare financial statements, MD & As and Kinross’s other filings in accordance with GAAP or IFRS. The defendants violated these obligations.

110This averment is not a claim that the plaintiffs relied on Kinross’ alleged representations in deciding to purchase Kinross shares. Rather, it is an allegation that the act of acquiring shares was itself an act of detrimental reliance. The motion judge, therefore, held that the appellants’ pleading failed to properly plead both reliance and causation (at para. 226).

111Nonetheless, the motion judge concluded that the appellants could deliver a proper pleading for negligent misrepresentation that included all the constituent elements of the tort. Based on this assumption, he ruled that the cause of action criterion for certification was met: at paras. 228 and 230.

112Accepting his assumption, I see no error in the motion judge’s reasoning or in his conclusion on the cause of action criterion. The appellants’ pleading is susceptible to appropriate amendments to assert the required elements of the common law tort. This criterion, therefore, presents no insurmountable hurdle to certification.

113The second criterion for certification, at s. 5(1)(b) of the CPA, requires that “there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant”. Section 5(1)(e) additionally requires that there is an appropriate representative plaintiff.

114These certification criteria are readily met in this case. The class definition proposed by the appellants clearly identifies the persons who have a potential claim against the respondents and adequately defines the class period. And, before the motion judge, the respondents essentially conceded the s. 5(1)(e) representative plaintiff criterion. Accordingly, the class definition and the representative plaintiff criteria pose no impediment to certification of the common law claims.¹⁰

115The commonality certification requirement is set out at s. 5(1)(c) of the CPA. Under this section, an action shall be certified as a class proceeding if “the claims or defences of the class members raise common issues”. An issue will be “common” only where its resolution is necessary to the resolution of each class member’s claim, the class members’ claims share a substantial common ingredient, and all members of the class would benefit from the successful prosecution of the action, although perhaps not to the same extent: Pro-Sys Consultants at para. 108.

116I have set out the common issues proposed by the appellants in Schedule “B” to these reasons. The respondents did not contest the commonality of these questions before the motion judge. Like the motion judge, with two exceptions, I conclude that these questions meet the common issues criterion. In my view, the resolution of the questions posed as common issues is necessary to the resolution of the claims of each class member. Moreover, the resolution of these questions would appear to advance the claims of the entire class and, if commonly determined, will avoid duplication of legal and factual analysis. See Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, at para. 39.

117The first exception concerns the issue of reliance. Reliance is a claimant-specific issue, requiring individualized evaluation and fact-finding. See Green, at paras. 100-103. In most cases of negligent misrepresentation, therefore, issues of individual reliance have been regarded by the courts as inherently unsuitable for certification. In this case, in my view, the question of reliance is not a common issue.

118The second exception concerns the question whether damages for negligent misrepresentation may properly be quantified on an aggregate basis. In some cases, the courts have held that, once liability has been established, s. 24 of the CPA provides a method to assess the quantum of damages on a global basis.¹¹ In Pro-Sys, at paras. 127-134, the Supreme Court clarified that while the question whether damages can be determined on an aggregate basis can be certified as a common issue in a proper case, provincial statutory provisions that permit the calculation of aggregate damages in a class action (for example, s. 24 of the CPA), are procedural in nature and cannot be used to establish liability. Thus, the common issue whether damages assessed in the aggregate are an appropriate remedy is only determined at the common issues trial, after a finding of liability has been made.

119Here, the motion judge disagreed with the notion that damages for negligent misrepresentation could be calculated on an aggregate basis in this case (at para. 242).

120I agree. As I have already said, the issue of reliance is not a common issue in this case. And, as I discuss later in these reasons, individual trials of some complexity will be required to determine the question of reliance and, hence, liability. In these circumstances, the associated issue of consequential damages, should liability be found, must be determined in those individual trials rather than on a global basis.

(ii) Preferability Criterion

121The real certification battleground between the parties in relation to the common law claims concerns the issue whether a class action is the preferred procedure for the resolution of the common issues. The respondents argue that the common questions do not meet the preferable procedure criterion. They contend that if the action were certified, the resulting proceeding would involve a vast number of individual trials on the critical issues of reliance, causation and damages, thus undermining two of the key goals of a class action – judicial economy and access to justice – and imposing an unmanageable, inefficient, and unfair process on the parties and the court. For the following reasons, I agree.

122Considerable guidance has been afforded by the Supreme Court in Hollick, Pro-Sys and Fischer and by this court in Cloud concerning the principles that govern the application of the preferability requirement, and the proper approach to assessing preferability. These authorities confirm that there must be some basis in fact for the claim that a class proceeding is the preferable procedure to resolve the class members’ claims. This obliges the representative plaintiff to show that: 1) a class proceeding would be a fair, efficient and manageable method of advancing the claim; and 2) a class proceeding would be preferable to any other reasonably available means of resolving the class members’ claims: Fischer at para. 48, citing Hollick at paras. 28 and 31; Cloud at paras. 73-75.

123To establish some basis in fact for the preferable procedure criterion, the court does not consider whether the claim is likely to succeed; rather, it asks whether the claim should be permitted to proceed as a class action because that procedure would facilitate the three principal goals of class proceedings – judicial economy, behaviour modification and access to justice: Fischer at para. 22; Hollick at para. 27.

124However, it is not necessary to prove that the proposed class action will in fact achieve these goals: Fischer at para. 22. Rather, the court must consider the common issues in the context of the action as a whole and, when undertaking the comparative analysis that is contemplated by the preferability criterion, “focus on the statutory requirement of preferability and not impose on the representative plaintiff the burden of proving that all of the beneficial effects of the class action procedure will in fact be realized”: Fischer at paras. 21-22.

125Importantly, Fischer also provides guidance as to when a class action will be found to serve the goal of achieving access to justice. Fischer instructs, at para. 25, that the correct approach to the preferability inquiry must include both substantive and procedural aspects in relation to access to justice. To determine whether a class proceeding will facilitate access to justice, the court should address the following questions:

What are the barriers to access to justice?
What is the potential of the class proceedings to address those barriers?
What are the alternatives to class proceedings?
To what extent do the alternatives address the relevant barriers to access to justice?
How do the two proceedings compare?

Fischer, at paras. 27-38.

126These questions must be addressed “within the confines of the certification process; the court cannot engage in a detailed assessment of the merits or likely outcome of the class action or any alternatives to it”: Fischerat paras. 39-44.

127In this case, I conclude that a class proceeding is not the preferable procedure for prosecution of the common law claims. In my view, a class proceeding would not represent a fair, efficient and manageable procedure that is preferable to any alternative method of resolving the common law claims.

128First, proof of reliance, causation and damages poses particular difficulties in this case. To establish these elements of the common law tort, individualized inquiries and fact-finding will be both necessary and unavoidable. For example, to establish reliance on Kinross’ alleged misrepresentations regarding the goodwill associated with the Tasiast mine and consequential damages, numerous investor-specific questions arise. These include: 1) what representations were communicated or made known to each investor, and when; 2) what was the comparative experience level and degree of investment sophistication of each investor at the relevant times; 3) what investment recommendations were made to each investor; 4) what connection, if any, exists between Kinross’ alleged misrepresentations and each investor’s acquisition of Kinross shares; 5) how many Kinross shares were held, and when, by each investor; and 6) what was the date of acquisition, the acquisition price and the sale price for each investor’s shares?

129Resolution of these questions does not lend itself to a class action. Rather, the need for a host of individual inquiries regarding reliance, causation and damages renders the common law claims unsuitable for certification. See for example, Green (S.C.J.), at paras. 599-601. At a minimum, the need for numerous individual inquiries undercuts the goal of judicial economy and could overwhelm the resolution of the common issues, producing an inefficient and unmanageable class proceeding.

130Second, it has already been determined in this case that the appellants’ statutory misrepresentation claims have no reasonable prospect of success at trial. This assessment of the merits was made on the basis of the comprehensive record on the leave motion. In my opinion, in the unique circumstances where 1) statutory misrepresentation claims and common law misrepresentation claims, based on the same evidentiary foundation, are combined, and 2) the former claims have been found to have no reasonable possibility of success under a statutory mechanism that is directed at access to justice, it is appropriate to consider the outcome of the leave motion for the statutory claims in the preferability inquiry regarding the common law claims. This conclusion is reinforced, in my view, by the fact that the courts have recognized that reliance-based claims are particularly unsuitable for resolution in a class proceeding.

131With the exception of the cause of action criterion, the class representative on a certification motion must demonstrate some basis in fact for each of the certification criteria, including the preferability criterion. In this case, the appellants advanced the same theory of misrepresentation, grounded on the same factual matrix, for the purpose of both leave and certification. The motion judge scrutinized the evidentiary record relied on by the appellants in support of the Goodwill Impairment Claim in detail, concluding that the appellants’ statutory misrepresentation claims had no reasonable possibility of success.

132In these circumstances, in my opinion, it is inappropriate to simply ignore the denial of leave for the statutory claims. The motion judge’s leave decision is a relevant consideration in determining whether the class representative has demonstrated some basis in fact that a class proceeding is the preferable procedure to resolve the class members’ claims. It, too, favours the conclusion that a class action is not the preferred method of advancing the common law claims in this case.

133Third, it does not assist the appellants that this court certified common law misrepresentation claims in Green. In Green, this court was willing to certify the common law claims alongside associated statutory misrepresentation claims. Nothing in Green suggests that the common law misrepresentation claims, standing alone, would have been certified.

134Nor is this a case like Carom v. Bre-X Minerals Ltd. (2000), 51 O.R. (3d) 236 (C.A.), leave to appeal to S.C.C. refused, [2000] S.C.C.A. No. 660, cited by the appellants. In Bre-X, the motion judge granted certification of a fraudulent misrepresentation claim but denied certification of a companion negligent misrepresentation claim on the basis that the individual trials required to determine reliance, causation and damages would be “complex and lengthy”: Carom v. Bre-X Minerals Ltd. (1999), 44 O.R. (3d) 173 (S.C.J.), at pp. 202, 221 and 239-40, aff’d (1999), 46 O.R. (3d) 315 (Div. Ct.). On appeal to this court, the latter ruling was reversed and certification of the negligent misrepresentation claim was granted. No appeal was taken from the motion judge’s ruling on certification of the fraudulent misrepresentation claim.

135As in Green, nothing in Bre-X suggests that the negligent misrepresentation claim, standing alone, was suitable for certification. It was only in the face of the certification of the fraudulent misrepresentation claim that the goals of judicial economy and access to justice justified certification of the negligent misrepresentation claim. As MacPherson J.A. of this court said, at para. 42:

Given the accepted definitions of the torts of fraudulent misrepresentation and negligent misrepresentation, I can see no logical or principled basis for treating them differently on the question of certification. I could understand the order certifying, or refusing to certify, both claims. I do not, however, understand why opposite orders were considered appropriate for the two claims.

Accordingly, as the fraudulent misrepresentation claim was certified and that ruling was not appealed, the need for individual inquiries did not prevent certification of the negligent misrepresentation claim either.

136I therefore do not read the decisions of this court in Green and Bre-X as retreating from the proposition that, generally, common law negligent misrepresentation claims in securities cases are not suitable for certification. As Strathy J. (as he then was), indicated in Green, (S.C.J.), at para. 610, a class proceeding is not the preferable procedure for resolving such reliance-based claims, which give rise “to individual issues of causation and reliance that would be unmanageable”. In contrast, of course, there is no need to prove reliance in statutory misrepresentation claims under the Securities Act. For this and other reasons, the statutory action under s. 138.3, which was enacted in part due to the difficulty in proving reliance-based common law claims, is “tailor-made for a class action”: Green (S.C.J.) at paras. 595 and 611.

137Finally, I am mindful of Fischer’s holding that the access to justice evaluation under the preferability inquiry is to be approached by reference to a series of questions directed at identifying the barriers to access to justice that a class action could address and determining whether those concerns would remain even when alternative avenues of redress are considered: Fischer at para. 26.

138In the case at bar, as I have stressed, numerous individual trials will be required to establish reliance, causation and damages. If a class action were to be certified, those trials would proceed against the backdrop of an existing judicial determination that the appellants’ core claims of misrepresentation, in particular, the Goodwill Impairment Claim, hold no reasonable prospect for success at trial. Yet the same claim is said to warrant a class action for common law negligent misrepresentation claims grounded on the same alleged facts. In these circumstances, encumbering the parties and the courts with a complex class action that is destined to fail hardly promotes the goals of judicial economy and access to justice.

139That said, I recognize that there may well be economic barriers to the pursuit of the common law claims on an individual basis. I also acknowledge that the option of individual actions to pursue securities misrepresentation claims is unappealing, costly and cumbersome. But that is precisely the access to justice impediment sought to be remedied by s. 138.3 of the Securities Act. To permit a class action to proceed in the circumstances of this case, in my view, would render access to justice more illusory than real and would significantly undercut the goal of judicial economy. The goal of behaviour modification does not alter this conclusion.

140For the reasons given, I conclude that the common law claims do not satisfy the preferable procedure certification criterion. While the motion judge’s certification analysis is tainted by error, I agree with his ultimate holding that certification of the common law negligent misrepresentation claims should be denied.

E. Disposition

141Accordingly, I would dismiss the appeal and confirm the motion judge’s leave and certification rulings. As the respondents have been successful on appeal, they are entitled to costs of the appeal. I would fix those costs in the sum of $85,000, inclusive of disbursements and all applicable taxes.

Released:

“AH” “E.A. Cronk J.A.”

“DEC 17 2014” “I agree Alexandra Hoy A.C.J.O.”

“I agree S.E. Pepall J.A.”

Schedule “A”

Securities Act, R.S.O. 1990, c. S.5

138.3 (1) Where a responsible issuer or a person or company with actual, implied or apparent authority to act on behalf of a responsible issuer releases a document that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released and the time when the misrepresentation contained in the document was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,

(a) the responsible issuer;

(b) each director of the responsible issuer at the time the document was released;

(d) each influential person, and each director and officer of an influential person, who knowingly influenced,

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer to release the document, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the release of the document; and

(e) each expert where,

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released by a person or company other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document.

Public oral statements by responsible issuer

(2) Where a person with actual, implied or apparent authority to speak on behalf of a responsible issuer makes a public oral statement that relates to the business or affairs of the responsible issuer and that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the public oral statement was made and the time when the misrepresentation contained in the public oral statement was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,

(a) the responsible issuer;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the making of the public oral statement;

(d) each influential person, and each director and officer of the influential person, who knowingly influenced,

(i) the person who made the public oral statement to make the public oral statement, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the making of the public oral statement; and

(e) each expert where,

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the person making the public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the public oral statement.

Influential persons

(3) Where an influential person or a person or company with actual, implied or apparent authority to act or speak on behalf of the influential person releases a document or makes a public oral statement that relates to a responsible issuer and that contains a misrepresentation, a person or company who acquires or disposes of the issuer’s security during the period between the time when the document was released or the public oral statement was made and the time when the misrepresentation contained in the document or public oral statement was publicly corrected has, without regard to whether the person or company relied on the misrepresentation, a right of action for damages against,

(a) the responsible issuer, if a director or officer of the responsible issuer, or where the responsible issuer is an investment fund, the investment fund manager, authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(b) the person who made the public oral statement;

(c) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement;

(d) the influential person;

(e) each director and officer of the influential person who authorized, permitted or acquiesced in the release of the document or the making of the public oral statement; and

(f) each expert where,

(i) the misrepresentation is also contained in a report, statement or opinion made by the expert,

(ii) the document or public oral statement includes, summarizes or quotes from the report, statement or opinion of the expert, and

(iii) if the document was released or the public oral statement was made by a person other than the expert, the expert consented in writing to the use of the report, statement or opinion in the document or public oral statement.

Failure to make timely disclosure

(4) Where a responsible issuer fails to make a timely disclosure, a person or company who acquires or disposes of the issuer’s security between the time when the material change was required to be disclosed in the manner required under this Act or the regulations and the subsequent disclosure of the material change has, without regard to whether the person or company relied on the responsible issuer having complied with its disclosure requirements, a right of action for damages against,

(a) the responsible issuer;

(b) each director and officer of the responsible issuer who authorized, permitted or acquiesced in the failure to make timely disclosure; and

(i) the responsible issuer or any person or company acting on behalf of the responsible issuer in the failure to make timely disclosure, or

(ii) a director or officer of the responsible issuer to authorize, permit or acquiesce in the failure to make timely disclosure.

Multiple roles

(5) In an action under this section, a person who is a director or officer of an influential person is not liable in that capacity if the person is liable as a director or officer of the responsible issuer.

Multiple misrepresentations

(6) In an action under this section,

(a) multiple misrepresentations having common subject matter or content may, in the discretion of the court, be treated as a single misrepresentation; and

(b) multiple instances of failure to make timely disclosure of a material change or material changes concerning common subject matter may, in the discretion of the court, be treated as a single failure to make timely disclosure.

No implied or actual authority

(7) In an action under subsection (2) or (3), if the person who made the public oral statement had apparent authority, but not implied or actual authority, to speak on behalf of the issuer, no other person is liable with respect to any of the responsible issuer’s securities that were acquired or disposed of before that other person became, or should reasonably have become, aware of the misrepresentation.

Schedule “B”

Proposed Common Issues

(a) Did the Defendants make representations that were untrue, inaccurate or misleading, including omissions, and if so, what are the misrepresentations, who made these representations, when, where and how?

(b) If the answer to (a) is yes, do the misrepresentations constitute misrepresentations within the meaning of the OSA or the equivalent provisions of securities legislation in other provinces?

(c) Did the Defendants fail to make timely disclosure within the meaning of the OSA or the equivalent provisions of securities legislation in other provinces?

(d) If the answer to (b) or (c) is yes,

(i) when and by what means were the misrepresentations publicly corrected or in the case of failure to make timely disclosure, when and by what means was the disclosure made?

(ii) did the individual Defendants authorize, permit or acquiesce in the release of documents containing the misrepresentations, in the making of a public oral statement containing misrepresentations or in the failure to make timely disclosure?

(iii) for public oral statements containing such misrepresentations, did the person who made the statement do so with actual implied or apparent authority to speak on behalf of Kinross?

(iv) for the misrepresentations in non-core document[s] or in a public oral statement, did the Defendants know of the misrepresentations at the time they were made? If not, did the Defendants deliberately avoid acquiring such knowledge or were they guilty of gross misconduct in connection with the misrepresentations?

(v) before the release of the documents and the public oral statements containing misrepresentations and before the failure to make timely disclosure first occurred, did the Defendants conduct or cause to be conducted a “reasonable investigation” in accordance with subsection 138.4(6) of the OSA or the equivalent provisions of securities legislation in other provinces?

(vi) at the time of the release of the document[s] and public oral statements containing misrepresentations or at any time for a failure to make timely disclosure, as the case may be, did the Defendants have reasonable grounds to believe that the documents or oral statement[s] contained the misrepresentations or that the failure to make timely disclosure would occur?

(e) If the answer to (a) is yes, did the Defendants owe a duty of care to the class members?

(f) If the answer to (e) is yes, did the Defendants act negligently in making the misrepresentations?

(g) If the answer to (f) is yes, can each class member’s reliance be inferred from the fact of the class member having acquired Kinross shares in an efficient market?

(h) Can the amount of damages for negligent misrepresentation or the statutory claims under Part XXIII.1 of the OSA or the equivalent provisions of securities legislation in other provinces be determined on an aggregate basis? If so, in what amount and who should pay it to the class?

(i) What are the applicable limits on damages, if any, for each Defendant under section 138.7 of the OSA or the equivalent provisions of securities legislation in other provinces?

(j) For each Defendant found liable for claims under Part XXIII.1 of the OSA or the equivalent provisions of securities legislation in other provinces, what is the Defendant’s respective responsibility for assessed damages?

(k) Is Kinross vicariously liable or otherwise responsible for the acts of the individual Defendants?

Footnotes

The full text of s. 138.3 is reproduced in Schedule “A” to these reasons.
R.S.O. 1990, c. S.5.
Although, as pleaded, the appellants’ Goodwill Impairment Claim applies to both mines, the focus of their submissions on the leave motion and this appeal was the goodwill associated with the Tasiast mine.
S.O. 1992, c. 6.
On October 11, 2013, the motion judge ordered that the Duff & Phelps LLC reports be sealed, kept confidential and not form part of the public record, with access to the reports being made available only to specified persons or entities, including the court. The motion judge also directed that the sealing order continue after the final disposition of the leave and certification proceedings. Accordingly, while this court reviewed the full version of the reports, reference in these reasons is made only to part of the contents of the reports as disclosed on the public record.
Although Kinross’ February 15, 2012 press release refers to a goodwill write down of $2.94 million, this appears to have been a typographical error. In a February 16, 2012 Q4 earnings conference call, Kinross reported a goodwill impairment charge of $2.9 billion. The latter figure is the amount referenced by the motion judge, at para. 142 of his reasons, by the appellants in their facta on appeal and on the leave motion, and by the appellants’ accounting expert (Alan T. Mak) in his reports filed on the leave motion.
Where additional facts are relevant to the issues on appeal, I will discuss those facts in the context of the issues to which they relate.
Section 5(1)(a) of the CPA provides: “The court shall certify a class proceeding…if, (a) the pleadings or the notice of application discloses a cause of action.”
It was not until January 7, 2014, after the release of the motion judge’s reasons on the leave motion, that the appellants amended their statement of claim to plead the Expansion Claim.
I note that the question whether the appellants have proposed an acceptable litigation plan is not an issue on appeal.
See for example, Markson v. MBNA Canada Bank, 2007 ONCA 334, 85 O.R. (3d) 321, at para. 40, leave to appeal to S.C.C. refused, [2007] S.C.C.A. No. 346, citing Chadha v. Bayer Inc. (2003), 63 O.R. (3d) 22, at para. 49, leave to appeal to S.C.C. refused, [2003] S.C.C.A. No. 106. See also Gilbert v. Canadian Imperial Bank of Commerce, 2004 34176 (S.C.J.).

A. Introduction

B. Background in Brief

(1) Acquisition of the Gold Mines

(2) Kinross’ Drilling Programs and Results at the Tasiast Mine

(3) 2012 Announcements

(4) Expert Accounting and Valuation Evidence

C. Issues

D. Analysis

(1) Leave Ruling

(2) Certification Ruling

E. Disposition

Schedule “A”

Schedule “B”

Footnotes

A. Introduction

B. Background in Brief

(1) Acquisition of the Gold Mines

(2) Kinross’ Drilling Programs and Results at the Tasiast Mine

(3) 2012 Announcements

(4) Expert Accounting and Valuation Evidence

C. Issues

D. Analysis

(1) Leave Ruling

(2) Certification Ruling

E. Disposition

Schedule “A”

Schedule “B”

Footnotes

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